Angara proposes tax break for big PPP projects

MANILA, Philippines–Sen. Juan Edgardo “Sonny” Angara has proposed to exempt from realty taxes big-ticket projects of “national significance” under the flagship public-private partnership (PPP) program in a bid to boost infrastructure development.

“For the country to build on its recent economic gains and to ensure the proper investment environment in our country, the private sector must be further encouraged to make investments through a modernized and enhanced PPP law,” Angara, who chairs the Senate ways and means committee, said in a statement on Tuesday.

Angara pointed out that since the huge investments for infrastructure have gone beyond the government’s means, the private sector must increasingly be enjoined to participate in building vital infrastructure.

The senator filed last week Senate Bill (SB) No. 2672 or the PPP Act, which he said “provides for more liberalized government regulations and procedures to better address the needs and bureaucratic concerns of PPP investors.”

The proposed measure provides for the automatic grant of administrative franchise, license or permit in favor of the winning bidder, subject to the compliance with the requirements of the regulator and payment of appropriate taxes and fees.

The bill also “aims to protect public interest by ensuring fair and reasonable pricing, timely delivery of quality infrastructure, goods and services, and by requiring full public disclosure of all PPP transactions.”

Another feature of Angara’s bill is the introduction of so-called “projects of national significance.”

Under SB 2672, the President may classify mass transit, power, sewerage, toll road and water, among other big-ticket projects, as of national significance, following certification and recommendation by the Cabinet-level, inter-agency Investment Coordination Committee, as well as consultation with the Department of the Interior and Local Government.

The criteria for such PPP projects of national significance include economic impact, the number of jobs it would generate and project cost, Angara explained in a text message.

To make these huge projects more lucrative, the measure proposes tax breaks for investors. Once SB 2672 is passed into law, “[a]ll real properties which are directly used for [PPP projects of national significance] shall be exempt from any and all real property taxes, while all local taxes, fees and charges imposed by a province, city or municipality on the project proponent shall not exceed 50 percent of 1 percent of gross sales or receipts of the preceding calendar year,” according to Angara.